SES AI Earnings Call Shows Growth Amid Ongoing Losses

SES AI Corporation Class A ((SES)) has held its Q1 earnings call. Read on for the main highlights of the call.

SES AI Corporation’s latest earnings call struck a cautiously optimistic tone, balancing clear operational traction with persistent losses and execution risks. Management highlighted strong revenue growth, expanding margins, and new commercial wins, but also acknowledged cash burn, lumpy revenue timing, and long qualification cycles that could delay the path to scale profitability.

Revenue Surge and Outlook Reaffirmed

SES AI reported Q1 2026 revenue of $6.7 million, up 47% sequentially from $4.6 million and described as well above consensus expectations. Management reaffirmed full‑year 2026 revenue guidance of $30 million to $35 million, signaling confidence in demand despite some timing shifts that pulled about $1.5 million of 2025 revenue into Q1.

Margin Expansion Signals Better Economics

Gross profitability improved meaningfully, with GAAP gross margin rising to 18.1% from 11.3% and non‑GAAP gross margin to 18.3% from 11.7%. The improvement was driven by healthier margins in the UZ energy‑storage segment, higher‑margin sample sales, and recurring subscription revenue from the Molecular Universe software platform.

Cost Discipline and OpEx Reduction Plans

Operating expenses remain high versus revenue, with GAAP OpEx at $19.1 million and non‑GAAP at $14.3 million in Q1, slightly above last year. The company reiterated a plan to reduce full‑year operating expenses by about 15%, with the full quarterly impact expected to show up starting in Q3 as cost actions fully phase in.

Narrowing Losses and Emerging Operating Leverage

SES AI’s GAAP net loss narrowed to $12.1 million, or $0.04 per share, from $17.0 million, or $0.05 per share, while non‑GAAP net loss improved to $11.1 million, or $0.03 per share. Adjusted EBITDA loss improved to $12.8 million from $13.8 million, reflecting early signs of operating leverage as revenue scales faster than core costs.

Liquidity Strength and Cash Burn Dynamics

The company ended Q1 with roughly $178 million in liquidity while using about $20 million of cash in operations during the quarter, in line with its plan. Management emphasized its capital‑expenditure‑light model and believes current liquidity is sufficient to fund key growth initiatives through 2026, though sustained burn underscores the need to keep tightening expenses.

ATGE Deal Opens North American ESS Channel

In energy storage systems, SES AI signed a multiyear distribution agreement with ATGE Power to enter the North American market, valued at about $20 million over three years. The deal gives immediate access to established residential, commercial, and industrial channels, potentially accelerating adoption of the company’s UZ ESS products.

Drone Cell Manufacturing and Early Demand Pipeline

SES AI completed the conversion of its Jeongju, South Korea line to produce drone‑format power cells, planning to ramp capacity to more than one million units annually. It also began shipping NDA‑compliant cells from Chengdu for customer evaluation, with a pipeline of a few dozen prospects and indicative pricing of about $25 to $35 per cell, implying $25 million to $35 million potential revenue at full utilization.

Molecular Universe Platform Gains Commercial Traction

The company launched Molecular Universe v2.5, its fifth major upgrade, adding new AI‑driven workflows and on‑premise deployment options for customers. A major global battery manufacturer signed a multiyear subscription for the Search‑in‑a‑Box product, while around half a dozen customers moved into second‑phase materials testing and the Hyzon joint venture remained on track for large‑scale production.

Finance Leadership Transition for Next Growth Phase

SES AI announced a CFO transition, with Jing Nealis stepping down and Ray Liu, a CFA and CPA, taking over the role. Management presented the move as a way to support the next phase of scaling, aiming to preserve continuity in financial strategy while sharpening focus on profitability and capital allocation.

Profitability Still Distant Despite Progress

Despite the improvements, SES AI remains firmly in the red, with GAAP net loss at $12.1 million, non‑GAAP loss at $11.1 million, and adjusted EBITDA negative $12.8 million in Q1. Elevated GAAP operating expenses nearly triple revenue and the business remains dependent on scaling sales and executing cost cuts to approach breakeven.

Revenue Volatility and Accounting Noise

Management cautioned that quarterly results can be lumpy, pointing to the roughly $1.5 million revenue shift from 2025 into Q1 2026 as one example. The Q1 GAAP net loss also benefited from a $4.2 million noncash gain tied to fair‑value remeasurement of sponsor earn‑out liabilities, an item that can swing results but does not reflect core operating momentum.

Commercial Timelines and Capacity Constraints

The company highlighted lengthy customer qualification cycles, with drone customers typically needing one to two quarters for audits and materials customers often requiring six to nine months plus another quarter to reach commercial status. Current NDA‑compliant capacity is largely in Korea and Chengdu, and management is exploring Southeast Asia options, meaning capacity limits could cap near‑term revenue if demand ramps quickly.

Forward‑Looking Guidance and Growth Drivers

Looking ahead, SES AI reaffirmed its 2026 revenue outlook of $30 million to $35 million and expects further margin improvements as mix shifts toward higher‑value products and software. The company is targeting more than one million annual drone cells from the Korea line, sees roughly $20 million of contracted ESS distribution revenue over three years, plans to cut full‑year operating expenses by about 15%, and expects Molecular Universe to add modest revenue while enhancing the broader business.

SES AI’s earnings call painted a picture of a company transitioning from technology validation to early commercialization, with tangible revenue growth and margin gains offset by significant cash burn and timing risks. For investors, the story hinges on whether drone cells, ESS distribution, and the Molecular Universe platform can ramp quickly enough to justify the current investment in capacity and ultimately move the company toward sustainable profitability.